A Leader Who Looms

As the Asian leader who pioneered "dual track" development, Thaksin might have climbed the pantheon of great economic thinkers if not for a massive political blunder. In late 2005 he sold his family's telecom conglomerate to the investment arm of Singapore's government for a cool $1.9 billion tax-free; the deal proved to be a bridge too far even in Thailand's crony-tolerant political culture. In response, a coalition of old business elites, opposition political parties and elements of the military demanded his resignation and staged marathon street protests that paralyzed Bangkok for months. On Sept. 19, 2006, Thailand's military staged its 13th coup since 1945, grabbing power while Thaksin was in New York to address the United Nations.

The junta initially tried to roll back Thaksinomics in favor of Buddhist-inspired self-sufficiency. The backlash was so swift, however, that the generals quickly reversed course and even made Thaksin's $1-per-visit health scheme free. Thailand's new government has followed suit with tax cuts for fuel, free electricity and water for small households and even free bus and rail travel. Finance Minister Surapong Suebwonglee says the programs will boost Thailand's annual growth to 6 percent and could cut household expenses by some $350 a year on average. "The ones who introduce these policies get votes, and the ones who take them away lose votes," says Nitinai Sirismattakarn, an independent economist.

But that only partly explains their popularity. The other draw, as Thaksin's record well illustrates, is that smart dual-track policies actually work.

With Jaimie Seaton in Bangkok

© 2008